While interest rates are rising, usury, which corresponds to the maximum a bank can lend, is at a historic low. Because of this unprecedented correlation, many aspiring homeowners are being denied mortgages.
At the age of 50, Nathalie* hoped to finally become an owner. With 3,000 euros net after income, this civil servant alone with one child could strive for it. From the summer of 2021, there will be an investigation and the conclusion of negotiations with a developer of individual houses. At the same time, his bank guarantees him that his project will be able to be financed with a loan. “In April, everything was tied up”, remembers this fifty-something from Oise. But she still has to sign the sale agreement for the land. The case dragged on, and the building permit was only finally approved in June. Except that mortgage rates, meanwhile, have anticipated the rise in ECB rates, returning well above the symbolic 1% bar. Nathalie was finally refused her loan on 13 July.
“It happened a few months ago”sighs the mother who saw her dream house crumble “with small garden”. His mortgage broker explained to him that his file was blocked “due to the wear rate”. The latter corresponds to the maximum interest rate at which a bank is permitted to lend. The Banque de France calculates it each quarter by determining the average of the rates applied by banks for the previous three months and then increasing it by a third. Since July 1, it has been set at 2.57% for mortgages of twenty years or more.
But this safeguard, which was supposed to protect households from abuse, has backfired on some of them in recent months. When negotiating a home loan, a banker ensures that the annual percentage rate (APR) for his borrower, i.e. for all costs of credit (nominal interest offered by the bank, but also insurance costs, warranty costs, etc.) does not exceed the wear rate. In the context of low rates for years, these situations were extremely rare. But while banks are raising their rates, the method of calculating attrition continues to take into account those practiced three months ago and is stagnating. The acceptable margin for the files is therefore reduced.
In a study published at the beginning of July, the brokerage firm Pretto estimates that 60,000 loans were financeable in 2021, but would no longer have been in connection with the June 2022 market. “It’s a dysfunction of the property market, households are simply displaced”, believes its co-founder Pierre Chapon. The phenomenon has even picked up speed in recent weeks, according to Xavier*, an independent broker near Lyon. “Many bankers have told me that they will no longer take my prospects. Some have even completely stopped distributing mortgages”he says.
Brokers becoming persona non grata at the bank counter? Société Générale no longer accepts their files “temporary” but “will continue to offer credit to its customers and examine their situation on a case-by-case basis”. On the Crédit Agricole side, it is admitted “some banks refuse brokers because they want more flexibility in the wear rate”. Doing away with brokerage fees in the calculation of APR is really a good way not to exceed wear and tear.
If he does not judge “not outrageous considering inflationary context» that the banks raise their credit interest rates up to almost 2%, the president of the broker Cafpi, Olivier Lendrevie, believes that it is rather the borrower’s insurance that should be excluded from the APR. “Its cost is completely separate from price movements. It just depends on the individual risk profile. It only creates inequalities by excluding people from property because they are older or have health problems.” he is indignant.
To Christelle, who lives in Essonne, “it was a cold shower”. This 46-year-old daycare worker and her handyman wanted to invest in a house for 300,000 euros. With their two combined salaries, but also their 190,000 euros in contributions thanks to the sale of their previous apartment, the matter should have been handled smoothly. But their broker explains to them that the file will not pass due to the current situation. “On the contrary, he explained to us that young people who presented an identical one would have found it easier to get credit”, she says.
For Pierre Chapon de Pretto, it is therefore urgent to review the method for calculating wear and tear. “Preventing people from becoming tenants while rents rise is a purchasing power problem”. The banks themselves say that they are in favor of usury rates being updated more quickly. Consumer associations are consulted by the government on this issue and can influence it. However, UFC Que Choisir says it has not received “extremely few reports”. The phenomenon would therefore not be of magnitude. Unless it is its complexity that deters aggrieved borrowers from appealing…
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